Alaska Administrative Code
Title 11 - Natural Resources
Part 6 - Lands
Chapter 83 - Oil and Gas Leasing
Article 2 - Net Profit Share Leasing
11 AAC 83.241 - Production tax lease allowance
Universal Citation: 11 AK Admin Code 83.241
Current through August 30, 2024
(a) The production tax lease allowance for purposes of 11 AAC 83.240(b) is the greater of zero or the amount calculated by subtracting the tax credit, if any, under (b) of this section from the production tax before credits. The production tax before credits is the greater of the following two amounts:
(1) the sum of either (A) or (B) of this
paragraph, depending on the month of production, and (C) of this paragraph.
(A) For a month before September 2017, the
monthly production tax net revenue under (c) of this section multiplied by the
net profit deductibility factor under (e) of this section multiplied by
(i) 22.5 percent, for a month before July
2007;
(ii) 25 percent, for a month
after June 2007 and before January 2014; or
(iii) 35 percent, for a month after December
2013 and before September 2017; or
(B) For a month after August 2017, 35 percent
multiplied by the amount resulting from substracting (ii) from (i) of this
subparagraph:
(i) the net profit
deductibility factor under (e) of this section multiplied by the amount
resulting from subtracting the royalty payments under
11 AAC 83.242 and the amounts
calculated under paragraph (1) and (2) under (c) of this section from the
production revenue under
11 AAC 83.222;
(ii) for oil and gas that meet one or more
criteria in
AS
43.55.160(f) and that have
not expired as to that oil and gas under
AS
43.55.160(f), 0.2 multiplied
by the lessee's production revenue under
11 AAC 83.222 generated from that
oil and gas net of the corresponding royalty payments under
11 AAC 83.242 multiplied by the
net credit augmentation rate under (f)(1) of this section and
(C) the lease-allocated tax based
on price index under (d) of this section;
(2) the product of
(A) the percentage rate that would be
applicable under
AS
43.55.011(f)(1) or (f)(2) if
the phrase "calendar year" were replaced by the phrase "month of production,"
based on the average spot price during the month as calculated under
15 AAC 55.171(m)
for ANS; and
(B) the production
revenue under
11 AAC 83.222 less the royalty
owed to the state under
11 AAC 83.242.
(b) The tax credit for purposes of (a) of this section are
(1) for a
month before September 2017, the product of (A) and (B) of this paragraph. For
a month after August 2017, the minimum of the production tax before credits
under (a) of this section and the amount resulting from the product of (A) and
(C) of this paragraph.
(A) the fraction
obtained by dividing the amount of oil and gas in Btu-equivalents produced by
the lessee from the NPSL during the month and taxable under
AS
43.55.011(e), by the amount
of Btu-equivalents of oil and gas produced by the lessee statewide during the
month and taxable under
AS
43.55.011(e);
(B) 1/12 of the maximum amount of the tax
credit for the calendar year calculated under
AS
43.55.024(c)(1) or (2), as
applicable, but substituting in that calculation the lessee's average amount of
oil and gas in Btu-equivalents, as defined in
11 AAC 83.295, produced a day
statewide during the month and taxable under
AS
43.55.011(e), for the
lessee's average amount of oil and gas in BTU equivalent barrels, as defined in
AS
43.55.900, produced a day statewide during
the calendar year and taxable under
AS
43.55.011(e);
(C) the product of the net credit
augmentation rate under (f)(2) of this section and 1/12 of the maximum amount
of the tax credit for the calendar year calculated under
AS
43.55.024(c)(1) or (2), as
applicable, but substituting in that calculation the lessee's average amount of
oil and gas in Btu-equivalents, as defined in
11 AAC 83.295, produced a day
statewide during the month and taxable under
AS
43.55.011(e), for the lessee's average amount
of oil and gas in BTU equivalent barrels, as defined in
AS
43.55.900, produced a day statewide during
the calendar year and taxable under
AS
43.55.011(e);
(2) for a month after December
2013 and before January 2017, the amount resulting from the calculation under
subparagraph (A) of this paragraph. For a month after December 2016 and before
September 2017, the amount resulting from the calculation under subparagraph
(B) of this paragraph. For a month after August 2017, the minimum of the
amounts resulting from the calculation under subparagraphs (C) and (D) of this
paragraph.
(A) the product of $5 and the
number of barrels, if any, of oil, other than state royalty oil, that is
produced from the NPSL during the months and that meets one or more of the
criteria in
AS
43.55.160(f);
(B) the product of $5 and the number of
barrels, if any, of oil, other than state royalty oil, that is produced from
the NPSL during the months and that meets one or more of the criteria in
AS
43.55.160(f); and that have
not expired as to that oil and gas under
AS
43.55.160(f);
(C) the production tax before credits under
(a) of this section less the amount resulting from paragraph (1) of this
subsection;
(D) the product of the
net credit augmentation rate under (f)(2) of this section, $5, and the number
of barrels. if any, of oil, other than the state royalty oil, that is produced
from the NPSL during the month that meets one or more criteria in
AS
43.55.160(f) and that have
not expired as to that oil and gas under
AS
43.55.160(f).
(3) for a month after December
2013 and before September 2017, the smaller of the amounts calculated under (A)
and (C) of this paragraph. For a month after August 2017, the smaller of the
amounts calculated under (B) and (C) of this paragraph.
(A) the product of the number of barrels, if any, of oil, other
than state royalty oil, that is produced from the NPSL during the month and
that does not meet any of the criteria in
AS
43.55.160(f) and the dollar
per barrel amount that would be applicable under
AS
43.55.024(j)(1) - (9), if
the phrase "average gross value at the point of production" were replaced by
the phrase "NPSL production revenue under
11 AAC 83.222 attributable to oil
other than state royalty oil, divided by the number of barrels of oil, other
than state royalty oil, produced from the NPSL";
(B)the product of the net credit augmentation
rate under (f)(2) of this section, the number of barrels, if any, of oil, other
than state royalty oil, produced from the NPSL during the month that does not
meet any of the criteria in AS 143.55.160(f) and the dollar per barrel amount
that would be applicable under
AS
43.55.024(j)(1) - (9), if
the phrase "average gross value at the point of production " were replaced by
the phrase "NPSL production revenue under
11 AAC 83.222 attributable to oil
other than state royalty oil, divided by the number of barrels of oil, other
than state royalty oil, produced from the NPSL"; and
(C) the greater of zero, or the following
amount:
A minus B minus C, where
"A" equals the greater of the amounts calculated under (a)(1) and (2) of this section;
"B" equals the total amount of tax credits under (1) and (2) of this subsection; and
"C" equals the amount calculated under (a)(2) of this section.
(c) For purposes of 11 AAC 83.209(b) and (a) of this section, the monthly production tax net revenue equals the lessee's production revenue under 11 AAC 83.222 net of the lessee's royalty payments under 11 AAC 83.242, except that for a month after December 2013, the lessee's production revenue under 11 AAC 83.222 net of the lessee's royalty payments under 11 AAC 83.242 is only for purposes of (a) of this section multiplied by 0.8 for oil and gas that meet one or more of the criteria in AS 43.55.160(f) and that have not expired as to that oil and gas under AS 45.55.160(f) less the following amounts:
(1) the lessee's direct
operating costs during the month under
11 AAC 83.240, excluding the
production tax lease allowance under (a) of this section and abandonment costs
allowed under
11 AAC 83.240(e);
however, if the NPSL is within a unit subject to
AS
43.55.165(j), for purposes
of the calculation under this paragraph the lessee's direct operating costs
during the month are replaced by one-ninth of the lessee's direct operating
costs during the period April 1, 2006, through December 31, 2006, multiplied by
the following factor:
(A) 1.03 for a month
in 2007;
(B) 1.061 for a month in
2008;
(C) 1.093 for a month in
2009; and
(2) the
lessee's development costs under
11 AAC 83.219 incurred during the
month less the product of $.30 multiplied by the amount of the lessee's working
interest Btu-equivalents of oil and gas produced from the NPSL during the
month, including any overriding royalty share of oil and gas share of oil or
gas.
(d) The lease-allocated tax based on price index for purposes of (b) of this section equals, for a month
(1) before July 2007,
the amount of tax calculated under
AS
43.55.011(g) and (h), as
those provisions read on June 30, 2007, but substituting in that calculation,
on a per Btu-equivalent basis as applicable, as "Btu-equivalent" is defined in
11 AAC 83.295, the monthly
production tax net revenue under (c) of this section, for the monthly
production tax value of the taxable oil and gas as calculated under
AS
43.55.160, on a per BTU equivalent barrel
basis as applicable, as "BTU equivalent barrel" is defined in
AS
43.55.900;
(2) after June 2007 and before January 2014, the amount of tax
calculated under
AS
43.55.011(g), as repealed
and reenacted by sec. 17, ch. 1, SSSLA 2007, but substituting in that
calculation
(A) the monthly production tax
net revenue under (c) of this section, for the monthly production tax value of
taxable oil and gas as calculated under
AS
43.55.160;
(B) the lessee's Btu-equivalents, as defined in
11 AAC 83.295, of oil and gas
produced from the NPSL divided by the net profit deductibility factor for the
month under (e) of this section, for the BTU equivalent barrels, as defined in
AS
43.55.900, of taxable oil and gas;
(3) after December 2013,
zero.
(e) For purposes of (a) and (d) of this section, the net profit deductibility factor
(1) equals one for a month
(A) before July 2007;
(B) after June 2007, if the development
account beginning debit balance less the monthly production tax net revenue
under (c) of this section, if any, is positive or zero;
(2) otherwise is calculated according to the
following formula:
Before January 2014
NPDF = (1 - NPR) / (1 - (.25 * NPR)),
After December 2013
NPDF = (1 - NPR) / (1 - (.35 * NPR)), where
"NPDF" equals the net profit deductibility factor; and
"NPR" equals the net profit share defined in the lease expressed as a fixed percentage of the net profit payment account.
(f) For the purposes of
(1) subsection (a) of this section, the net
augumentation rate if equal to 1 for a month if
(A) the development account beginning debit
balance less the monthly production tax net revenue under (c) of this section,
if any, is positive; or
(B) if the
month of production is before September 2017; otherwise, the net credit
augmentation rate is calculated according to the following formula:
NCAR = 1 / (1 - (. 35 * NPR)), where
"NCAR" equals the net credit augmentation rate; and
" NPR" equals the net profit share defined in the lease expressed as a fixed percentage of the net profit payment account.
(2) subsection (b) of
this section, the net augumentation rate if equal to 1 for a month if
(A) the development account beginning debit
balance less the monthly production tax net revenue under (c) of this section,
if any, is positive; or
(B) if the
month of production is before September 2017; or
(C) the production tax before credits under
(a) of this section is no greater than the amount resulting from (a)(2),
otherwise, the net credit augmentation rate is calculated according to the
following formula:
NCAR = 1 / (1 - (. 35 * NPR))
Authority:AS 38.05.020
AS 38.05.180
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